PETALING JAYA: The share price of plantation company Felda Global Ventures Holdings Bhd (FGV) rose to RM1.84, up 4.55% as investors continued to react positively to confirmed news of a change in the company’s top leadership.
The stock has risen 22 sen from its close of RM1.62 on June 6 following the suspension of FGV group president and chief executive officer (CEO) Datuk Zakaria Arshad and three other FGV senior management officials by the board two weeks ago.
The board said that the suspension was due to alleged irregularities in the business transactions between FGV subsidiary Delima Oil Products Sdn Bhd and Afghan company Safitex Trading LLC.
However, Zakaria contends that he was being forced out of the plantation group because he opposed capital expenditure plans by the board into areas that were not core to the plantation business.
Amid the standoff between the board and the management, FGV has also been the subject of speculation that it was ripe for a corporate exercise.
This is because the major shareholder of FGV, which is Felda Holdings Bhd, has expressed dissatisfaction over the returns that it is getting from its investments in the plantation company.
FGV’s profits have been coming since it got listed in 2012.
As of Dec 31, 2016, it recorded a profit after tax and minority interests (Patami) of RM31.47mil, which was a far cry from a Patami of RM982.25mil in 2012.
FGV is the world’s largest plantation company with 440,600ha of land in Malaysia and Indonesia and supported by 72 mills with a capacity to produce 2.6 million tonnes of crude palm oil a year.
It also has a large logistics arm to support the transportation of 900,000 tonnes of vegetable oil a year and has 15 transport hubs and two warehouses.
However, FGV has been clouded by governance issues mainly because of an acquisition spree that started after it got listed. When it was listed in 2012, it had a cash pile of more than RM5bil. This has since dropped to RM1.87bil as of March 31 this year.
Between January 2013 and 2016, FGV completed seven acquisitions. The president and CEO during this period was Datuk Mohd Emir Mavani Abdullah and the chairman was Tan Sri Mohd Isa Abdul Samad.
Zakaria was appointed on April 1, 2016.
In a statement yesterday, the board of FGV announced the appointment and redesignation of Tan Sri Dr Sulaiman Mahbob as the new acting chairman of FGV replacing Mohd Isa.
The board also confirmed the resignation of Mohd Isa from his chairmanship of FGV, its subsidiaries, associates and joint-venture companies effective yesterday.
Moving forward, the board and management will focus its efforts on enhancing corporate governance and improving the group’s financial performance.
Meanwhile, to uphold the integrity, spirit of impartiality of the ongoing inquiry and ensuring proper corporate governance of FGV and Delima Oil, the Prime Minister’s Office (PMO) in a separate statement announced the appointment of Mohd Isa as the acting chairman of the Land Public Transport Commission or SPAD.
The PMO said Sulaiman, as the new acting FGV chairman, would immediately take action to oversee the implementation of these actions.
The government and FGV also received the independent report on the company’s decision to suspend its CEO, chief financial officer and two other senior management officials.
Having reviewed the report, it said four key findings and actions had been accepted.
It noted that there were sufficient facts and reasonable grounds warranting the initiation of disciplinary proceedings against the four individuals in relation to alleged breach of procedures in Delima Oil.
“As such, FGV should continue with its ongoing disciplinary proceedings.”
Secondly, it said the Delima Oil case highlighted the immediate need for FGV to radically improve its corporate governance and business controls at the group and subsidiary levels.
It recommended that FGV set up a “governance quantum leap” team for this purpose.
The PMO also noted that the decline in the financial performance of FGV and Felda over the last few years warranted a comprehensive business review.